(As of 7:05 am PST)
Stocks
opened today’s session slightly higher after yesterday’s rally which saw the
S&P500 record its fifth consecutive day of gains – its longest winning
streak of the year. With another light data day on the schedule today,
investors are taking a bit of a breather ahead of the unofficial kickoff of Q3
earnings season which starts tomorrow. The big story in the recent run-up in
stocks has been the resetting of expectations surrounding the Federal Reserve’s
timing of its first rate hike in 10 years. Prior to Friday’s jobs report,
expectations were that the Fed would likely raise rates by the end of 2015.
With the jobs report capping off a recent string of weak economic data, many
are now calling for the rate hike to be pushed back to 2016 (hence the market
rally over the past few days). Whatever the case, we are about to head into a
season which historically has proven to be the best period for stock gains
(November-April). It would not surprise us at all to see a year-end rally,
especially if company earnings exceed expectations. As mentioned
earlier, data is light today although a report on the US trade deficit showed
the deficit widening in August as a strong dollar reduced exports to the lowest
level in three years. In international news, Asian markets finished the day
mostly higher on rumors that Japan’s central bank may pursue additional
monetary easing measures at its meeting next week. European stocks are higher
across the board following yesterday’s optimism on Wall Street. Gold is up
nearly 1% today, while oil is surging nearly 2.5% in the early going. Interest
rates are near flat with the 10 yr. treasury yield stabilizing around 2.05%.
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